Skeptical Geologist Warns: Permian's Best Years Are Behind Us

Authored by Tsvetana Paraskova via OilPrice.com,

Geologist Arthur Berman, who has been skeptical about the shale boom, warned on Thursday that the Permian’s best years are gone and that the most productive U.S. shale play has just seven years of proven oil reserves left.

“The best years are behind us,” Bloomberg quoted Berman as saying at the Texas Energy Council’s annual gathering in Dallas.

The Eagle Ford is not looking good, either, according to Berman, who is now working as an industry consultant, and whose pessimistic outlook is based on analyses of data about reserves and production from more than a dozen prominent U.S. shale companies.

“The growth is done,” he said at the gathering.

Those who think that the U.S. shale production could add significant crude oil supply to the global market are in for a disappointment, according to Berman.

“The reserves are respectable but they ain’t great and ain’t going to save the world,” Bloomberg quoted Berman as saying.

Yet, Berman has not sold the EOG Resources stock that he has inherited from his father “because they’re a pretty good company.”

The short-term drilling productivity outlook by the EIA estimates that the Permian’s oil production hit 3.110 million bpd in April, and will rise by 73,000 bpd to 3.183 million bpd in May.

Earlier this week, the EIA raised its forecast for total U.S. production this year and next. In the latest Short-Term Energy Outlook (STEO), the EIA said that it expects U.S. crude oil production to average 10.7 million bpd in 2018, up from 9.4 million bpd in 2017, and to average 11.9 million bpd in 2019, which is 400,000 bpd higher than forecast in the April STEO. In the current outlook, the EIA forecasts U.S. crude oil production will end 2019 at more than 12 million bpd.

Yet, production is starting to outpace takeaway capacity in the Permian, creating bottlenecks that could slow down the growth pace.

Drillers may soon start to test the Permian region’s geological limits, Wood Mackenzie has warned. And if E&P companies can’t overcome the geological constraints with tech breakthroughs, WoodMac has warned that Permian production could peak in 2021, putting more than 1.5 million bpd of future production in question, and potentially significantly influencing oil prices.

The takeaway bottlenecks have hit WTI crude oil priced in Midland, Texas, which declined sharply compared with Brent in April, the EIA said in the May STEO.

As production grows beyond the capacity of existing pipeline infrastructure, producers must use more expensive forms of transportation, including rail and trucks. As a result, WTI Midland price spreads widened to the largest discount to Brent since 2014. The WTI Midland differential to Brent settled at -$17.69/b on May 3, which represents a widening of $9.76/b since April 2,” the EIA said.

Comments

ThanksChump Government nee… Mon, 05/14/2018 - 15:57 Permalink

Everyone forgets what drove the oil boom: oil shooting out of the ground under such pressure it was difficult to contain. Thousands of bbls per day, whether you could catch it or not.

 

The moment those gushers no longer happened every time you looked crooked at the ground, the party was effectively over. That it takes decades for everyone to recognize that it's over, changes nothing. Every day that goes by, oil is a bit more expensive to extract.

In reply to by Government nee…

brianshell The_Juggernaut Mon, 05/14/2018 - 14:09 Permalink

It is becoming more and more evident that the deep state actors have intentionally quashed the development of thorium molten salt reactors in order to maintain the petroleum, uranium and dollar hegemony.

It is time for for naysayers to abstain and for the voices of reason to be heard.

The planet is covered with thorium like sand on the beach.

Once the research and development costs have been absorbed, the whole world will be able to enjoy this new source of boundless energy.

This technology is not new. It was proven in a test bed at Oak Ridge Laboratory in the 1960's.

 

In reply to by The_Juggernaut

One of these i… brianshell Mon, 05/14/2018 - 17:11 Permalink

How do we EVER believe a single word that is told to us about nuclear matters after the last >50 years of complete bullshit?

Why don't we try doing solar properly?

1. Take a sunny area with plenty of sand, maybe a desert.

2. Invest enough power and resources to build an efficient electrically fired solar panel manufacturing plant which uses the local sand.

3. Manufacture and deploy solar panels (Intelligently*) until you have deployed enough to power the plant.

4. From this point on, divide production 50:50 between further solar deployment, and paying costs e.g. finance repayments, wages or provisions for the locals who by now will be forming communities underneath your solar panels, that sort of thing.

5. Keep churning out those panels until you run out of sand or customers.

Note: Use electric vehicles to transport the sand as soon as plant is up and running and generating extra capacity...

THere's a bit more to it than that, but it's basically a fast breeder system but using sand and sun to breed electricity, with solar panels & (If you planted your panels Intelligently* to allow cultivation of the now shaded & sheltered areas) useable real estate as "by products of the activity" rather than plutonium, if you get my drift..

 

In reply to by brianshell

Mr. Ed One of these i… Mon, 05/14/2018 - 18:50 Permalink

Great idea!!  But don't go to a oil company for funding!

And an even better idea would be LENR ...generates cheap energy 24hrs a day with or without sun, has zero carbon footprint, produces no dangerous isotopic waste and can be highly distributed in a washer or dryer-sized format (meaning resistant to things like EMP and earthquakes.)

Despite a rocky and disreputable start nearly 30 years ago (as "cold fusion"), an explosion of new approaches and confirmations by everyone from Toyota to the US Navy to NASA is showing that the science and technology of LENR are real.

But funds are needed to advance.  I'm sure the oil industry has no qualms about seeing billions go down the rathole that is ITER and toward other hot fusion megascience projects that will have no practical use for decades to come.  LENR projects and even such smaller hot fusion efforts as Lerner's dense plasma focus in the Princeton NJ area go begging for a few million.  And LENR is literally a few years from application - the hold-up is funding, not massive additional research.

What a sad misallocation of resources.  But I'm sure that oil interests don't mind at all.

In reply to by One of these i…

JuliaS The central planners Mon, 05/14/2018 - 16:33 Permalink

WW1 and WW2 were fought over access to oil. WW3 is always on the horizon for the very same reason - access to fossil fuel energy to which the world has no alternative. And it's not just for domestic consumption. Controlling China's access to fuel, means keeping its growth in check (or pretending at least that we have any say in the matter).

Everything in the Middle East has to do with oil and gas. Russia presents a threat not only because it can exert pressure on Europe though gas channeling, it is also tremendously self-sufficient. When the US runs out of gas, it crawls to a halt. Russia has a relatively low population. If their output declines, they'll export less, but still have enough to keep going. They have lower needs and that's a winning formula going forward.

That's why we're hell bent of doing something about Russia, because it messes up our game. They give oil to countries that we would love to have under our boot. The aren't begging for handouts, having all they need and then some and they aren't burning through it the way our MIC does. Maintaining a vast empire takes fuel. For now we have enough, but the clock is ticking. Price of oil negatively affects our way of life, because we're a net importer of resources.

In February of this year report came out promising US will become a net energy exporter by 2022. A lot of those assumptions were built with shale oil projections directly opposite to this article. What will actually happen? God knows.

I side with George Carlin's school of philosophy. When your needs aren't being met - drop some of your needs.

In reply to by The central planners

shortonoil The central planners Mon, 05/14/2018 - 17:30 Permalink

The average shale well begins production with an ERoEI of about 15:1. It plunges to about 7:1, or the dead state, by the end of the first year. To keep production even for the next 5 years will require the drilling of 1.5 million new wells at a cost of $7.3 trillion. If Berman is a pessimist he is not pessimistic enough.

 

http://www.thehillsgroup.org/

In reply to by The central planners

LaugherNYC Aliens-R-Us Mon, 05/14/2018 - 15:10 Permalink

This is the same genius who said Permian was a minor find, and technology wouldn’t be able to extract meaningful draws, it would lose $500 million a year, less than 2% of the claimed reserves were real, and...and..... reads like a paid Russkie shill.

Geez, the name of the author? Tsvetlana Parasite-ovka ... one might think of the GRU???

And ZH shows once again it is becoming a Putin bulletin board.

In reply to by Aliens-R-Us

EddieLomax LaugherNYC Tue, 05/15/2018 - 05:09 Permalink

I lot of people were surprised about the fracking for sure, but its expensive oil.

Is it profitable?  I see a lot of red ink out there, zero hedge reported last year that US mining lost more in a year than it earned in 7, I call that unprofitable.  That would support the theory that fracking is driven more by desperation than sound economics.

And to predict production peaking earlier after just a few years, I'd say that's a safe prediction for one reason.

Depletion, fracking produces wells that have ~70% of their production in just one year, its clear that pretty soon people are running flat out just to try and keep production stable let alone increase it.

 

Peak conventional oil happened a long time ago, but this fracking does still seem limited to the US, guessing we'll know for sure when the rich pickings are gone in the US when they start scouring the world again.

In reply to by LaugherNYC

Offthebeach booboo Mon, 05/14/2018 - 14:08 Permalink

All water is contaminated.  No water is ever contaminated.  Both are true at the same time.

Water, H2O is immensely stable compound and remains so.  It just commonly, almost always, surrounded by other compounds.  So the water, H20, is pure, basically, at all times.  The rest of the liquid mix, that we also call "water" is very ...."contaminated", or mixed, commonly with natural elements such as lead, sodium, aluminum, arsenic, hydrocarbons, and other organics, many quite nasty.  Basically everything and anything.  

Anyways, we were made to drink from puddles and pond edges and cool babbling mountain streams with a dead rotted elk, up and just around the bend.

But now we drink chlorine and fluoride from miles of  polyester plastic pipes.

We're gonna die I tells ya.

In reply to by booboo

American Sucker Mon, 05/14/2018 - 13:45 Permalink

Berman's one of the guys that convinced me that a serious peak oil collapse was imminent and that shale oil production would be minimal.  Whoops.  No need to listen to him again.

joak Mon, 05/14/2018 - 13:46 Permalink

Last time I read an article saying that infrastucture would be a bottleneck to increase the Permian production... Funny how experts contradict themselves.

Nuclear Winter Mon, 05/14/2018 - 13:48 Permalink

No? Noooooo!!!.... Peak Oil is gone! Sacre blue? Does that mean we don't need no Climate Change treaties anymore?

We will just continue to shovel coal! That will make the greenies happy.

arrowrod Mon, 05/14/2018 - 13:58 Permalink

Is everybody associated with oil a liar?  It's down, it's up, it's down, it's up.  Wouldn't be so bad if this was changing every 5 years.

Every day?

Working on my battery powered bicycle.

economicmorphine arrowrod Mon, 05/14/2018 - 14:01 Permalink

I worked in E&P for 10 years and found that oil people, generally speaking, have more integrity than people in a lot of other industries.  The public's inability to grasp that we're dealing with a commodity with a fixed supply does not make producers liars.  Here's a thought.  There are plenty of sources online if you want to understand oil and gas.   This site ain't one of them.

In reply to by arrowrod

3-fingered_chemist Mon, 05/14/2018 - 14:03 Permalink

There is a future for shale with regards to natural gas recovery. There is a ton of it down there. It would be far easier and more economical to transition to a natural gas powered vehicles than electric vehicles. Better for the environment too. For the price of a dishwasher, you can buy a setup that would permit one to fill up at home if a natural gas line exists.

Just think of all the cow/pig shit that could be digested to produce methane. Waste water treatment facilities also produce a lot of natural gas that is unnecessarily burned off.